Hill Heat

From the Wonk Room.

On Wednesday, five major U.S. corporations launched a new business coalition with the investors’ activist group Ceres to call for immediate, muscular, and progressive action to fight global warming. The founding members of Business for Innovative Climate and Energy Policy (BICEP) are Levi Strauss & Co., Nike, Starbucks, Sun Microsystems and The Timberland Company. As right-wing business organizations like the Chamber of Commerce pretend that limits on pollution will destroy the economy, the members of BICEP recognize that the true threat is failing to halt catastrophic climate change.

The eight principles embraced by BICEP for national action on global warming reflect recommendations from the Center for American Progress, Green For All, 1Sky, and other progressive organizations, including a moratorium on new coal plants, no subsidies for pollution permits, aggressive efficiency standards, and green-job creation in low-income communities.

In addition, BICEP calls for greenhouse gas emissions to be at least 25 percent below 1990 levels by 2020, in line with scientific recommendations—and more than double the target set by President-elect Barack Obama.

As Mindy Lubber, president of Ceres said in a press call, tackling global warming is integral to future economic strength:

Rather than ignore risk, address the risk and turn it into an opportunity. We need to send the right and honest market signal. Carbon pollution has a cost.

The full list of recommendations:

A coalition of corporations, labor, religious and environmental organizations has announced its support of Sen. Barbara Boxer’s (D-CA) manager’s mark of the Lieberman-Warner Climate Security Act. Several are members of the United States Climate Action Partnership (USCAP), which called for mandatory climate legislation in January 2007, but more recently has been wrapped in internal conflict.

The letter begins:

The undersigned companies and organizations urge you to vote in favor of the Climate Security Act, S. 3036 (formerly S. 2191), which is expected to be considered by the full Senate beginning June 2. This is a very important vote on a bipartisan plan to address climate change. Prompt action on climate change is essential to protect America’s economy, security, quality of life and natural environment.

USCAP signatories are Alcoa, Environmental Defense Action Fund, Exelon Corporation, FPL Group, General Electric, National Wildlife Federation, Natural Resources Defense Council, NRG Energy, Inc, and PG&E Corporation. Non-USCAP signatories are Calpine Corporation, Interfaith Power and Light Campaign, International Brotherhood of Boilermakers, Izaak Walton League of America, National Grid, National Parks Conservation Association, Pew Environment Group, Public Service Enterprise Group, Trout Unlimited, and the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting (UA).

Full text is below:

A media conference call to discuss the findings of a study jointly commissioned by the National Association of Manufacturers (NAM) and the American Council for Capital Formation (ACCF) that quantifies the potential national and state economic impacts of the Lieberman-Warner climate change bill, S. 2191, the America’s Climate Security Act of 2007.

Conducted by Science Applications International Corporation (SAIC), the independent study examines the implications of the legislation with respect to future energy costs, economic growth, employment, production, household income and the impact on low income earners. The study includes a comprehensive national economic assessment, as well as separate and specific overviews of the impact the legislation would have on all 50 U.S. states.

The results of the study will be outlined during a brief presentation which will be followed by a question and answer session. The full SAIC national and 50 state-specific studies will be posted online at 9:30 am ET, Thursday, March 13, in advance and can be found at either www.accf.org or www.nam.org/climatechangereport.

The call is for credentialed media only.

• The Honorable John Engler, President, National Association of Manufacturers
• Dr. Margo Thorning, Senior Vice President and Chief Economist, American Council for Capital Formation

12/03/2008 at 10:00AM

ExxonMobil, the world’s largest company by both revenue and market capitalization, has a place on the world stage comparable to a major nation-state (only 23 nations in 2006 had a GDP greater than Exxon’s revenues of $347 billion, which rose 7% in 2007). Only 31 nations exceeded its annual greenhouse gas emissions in 2004 [UN MDG indicators, ExxonMobil CDP response]. If end-use emissions of ExxonMobil’s products are included, its carbon footprint of 1 billion metric tons of CO2 equivalent is exceeded only by five nations.

David Sassoon at Solve Climate asked Mario Lopez-Alcala, a senior analyst with Innovest Strategic Value Advisors, to estimate how the Kyoto Protocol impacts the company. Lopez-Alcala made some counter-intuitive discoveries.

Turns out that under Kyoto, Exxon is responsible for abating only 9 million out of the 138 million tons of its carbon footprint—about 6.9% of its absolute exposure. Mario arrived at this figure by compiling a weighted average of the emissions targets affecting all Exxon operations around the world. His estimate for what it costs Exxon to abate those emissions, assuming it had to purchase carbon credits? About $1 billion a year. (He calculated net present value for the 2008-2012 Kyoto compliance period and applied a standard oil industry discount rate to arrive at the figure, based on an expected price of $28 per ton of carbon. He also had to add in to the calculation, abatement costs for reducing emissions to a baseline year.)

$1 billion annually is not a terribly large liability for a $400 billion company.

Furthermore:

There’s also another aspect to Exxon’s carbon footprint: the 129 million tons of emissions that it is not required to reduce. It is an enormous carbon asset in a world in which carbon has a price, and it presents a tangible opportunity for enhancing profitability – even beyond $40.6 billion. By reducing those emissions – most simply through reduced flaring, co-generation, heat recuperation, and carbon capture and sequestration – Exxon could reap profits from selling carbon credits it generates. Mario reports that BP is the leader in the sector in taking advantage of these opportunities, which are tangible and positive already.

Sassoon concludes that from an investor (as well as moral) standpoint, ExxonMobil’s storied resistance to the science of climate change is a poor corporate position.

At yesterday’s Investor Summit on Climate Risk, McKinsey’s economic research arm, the McKinsey Global Institute, released the report The Case for Investing in Energy Productivity (lead authors Jaana Remes and Diana Farrell).

The report finds that global investments on the order of $170 billion annually through 2020 ($38 billion in the US) in energy efficiency (what they call “energy productivity”) would deliver annual returns at a rate of 17 percent. Furthermore, these investments would reduce energy demand at half the cost of building out infrastructure to meet that demand. (For a sense of scale, $170 billion is 1.6 percent of global fixed-capital investment today.)

MGI finds some key energy-market failures that block the needed capital outlays:

Fuel subsidies that directly discourage productive energy use; a lack of information available to consumers about the kind of energy productivity choices that are available to them; and agency issues in high-turnover commercial businesses.

The report’s top-line recommendations for repairing these failures:

• Set energy efficiency standards for appliances and equipment
• Finance energy efficiency upgrades in new buildings and remodels (see Architecture 2030)
• Raise corporate standards for energy efficiency
• Invest in energy intermediaries (such as energy service companies aka ESCOs)

For more, read the full report.

The 2008 Investor Summit on Climate Risk will bring together more than 450 institutional investors, Wall Street leaders and CEOs from around the world to consider the scale and urgency of climate change risks, as well as the economic opportunities of a global transition to a clean energy future.

Purpose

The purpose of the Summit is to provide a high-level forum for state treasurers, leading institutional investors, and financial services firms from around the world to consider the scale and urgency of climate change risks, as well as the economic opportunities of a global transition to a clean energy future.

Objectives

Based on a vision of hope and opportunity, the Summit will focus on how investors can advance solutions to climate change, with a particular emphasis on the benefits of energy efficiency. The Summit aims to help investors:

• Examine recent scientific findings on climate risk and technological solutions
• Assess potential capital flows into energy efficiency and clean technologies
• Learn how treasurers, institutional investors and financial services firms worldwide are factoring climate risk into their policies and strategies
• Consider prudent steps investors can take to address climate risk and opportunities

Background

The 2008 Summit builds on the groundbreaking success of the first two UN Investor Summits on November 21, 2003, and May 10, 2005. Hundreds of institutional investors and asset managers from around the world, representing trillions of dollars in assets, attended the previous Summits. The information they shared raised profound concerns about investor exposure to climate risk, the future security of investment assets, and the fiduciary duty to take prudent steps to address climate risk on behalf of shareholders and beneficiaries. Information on previous Summits can be found at the Investor Network on Climate Risk website.

Climate Risk – and Opportunity

Climate change poses regulatory, legal, physical and competitive risks for companies. In the two years since the 2005 Summit there has been a growing recognition that climate change presents serious risks, not only for businesses and investments, but also for the global economy. Left unattended, risks from climate change will worsen over time, harming company assets and global investment portfolios. Leading economists, investors, and business leaders have stated recently that the costs of action to reduce greenhouse gas emissions are both affordable and significantly lower than the costs of inaction. Where there are risks, there are also opportunities, and the business opportunities posed by addressing climate change are significant. With the proper government policies and market conditions, low-carbon technologies that are available today could be more broadly deployed, and significant reductions in emissions could be achieved over the next few decades—all while creating vast new economic opportunities and new jobs.

14/02/2008 at 10:53AM

On Monday Citi Group, Morgan Stanley, and JPMorgan Chase announced the establishment of an “enhanced diligence” framework for judging proposed financings of certain new fossil fuel generation.

The framework, according to the joint press release, sets principles for energy efficiency (including “regulatory and legislative changes that increase efficiency in electricity consumption”), renewable energy and low-carbon distributed energy technologies, and assessing the “financial, regulatory and certain environmental liability risks” of CO2-emitting fossil fuel power generation. The group intends to “encourage regulatory and legislative changes that facilitate carbon capture and storage (CCS) to further reduce CO2 emissions from the electric sector.”

The group, which as the Rainforest Action Network’s Understory blog notes does not include major investor Bank of America, consulted the power companies American Electric Power, CMS Energy, DTE Energy, NRG Energy, PSEG, Sempra and Southern Company and the environmental organizations Environmental Defense and the Natural Resources Defense Council.

The National Council for Science and the Environment invites you to participate in the 8th National Conference on Science, Policy, and the Environment to develop and advance science-based solutions to climate change.

Join us in the dialogue with leading scientists, policy makers, industry leaders, educators, and other solutions-oriented innovators to develop comprehensive strategies for protecting people and the planet against the threat of climate change.

The three-day conference will be held January 16-18, 2008, at the Ronald Reagan Building and International Trade Center in Washington, DC. An interactive agenda features skill-building workshops, targeted breakout sessions, plenary sessions, and symposia to provide participants with an expansive understanding of climate change solutions—and how we can achieve them.

16/01/2008 at 08:00AM

Ceres is the dominant organization in climate-related investment, with the mission of “integrating sustainability into capital markets for the health of the planet and its people.” Their Investor Network on Climate Risk represents corporations and institutions controlling $4 trillion in assets calling for corporate climate disclosure, emissions-reduction legislation, renewable energy investment, and related actions.

J. P. Morgan is one of the few investment majors with a dedicated climate change research division.

Calvert, one of the main players in the “socially responsible” investment space, has Calvert Global Alternative Energy Fund (CGAEX).

Guinness Atkinson has the Guinness Atkinson Alternative Energy Fund (GAAEX).

PowerShares offers various index funds, including Global Clean Energy Portfolio (PBD) (WilderHill New Energy Global Innovation Index (NEX)), Global Water Portfolio (PIO) (Palisades Global Water Index (PIIWI)), Cleantech Portfolio (Cleantech Index (CTIUS)), Water Resources Portfolio (Palisades Water Index (ZWI)), WilderHill Clean Energy Portfolio (WilderHill Clean Energy Index (ECO)), and the WilderHill Progressive Energy Portfolio (WilderHill Progressive Energy Index (WHPRO)).

Winslow Management specializes in “green” investment, offering Green Growth (WGGFX) and the new Green Solutions mid-cap (WGSLX).

Green Century Funds offers the Green Century Balanced Fund (GCBLX) and Equity Fund (GCEQX).

Forward Management has the Sierra Club Stock Fund (SCFSX).

Innovest recently released the report Carbon Beta and Equity Performance based on their work on the Carbon Disclosure Project.

CSRWire has a newsfeed of environment-related corporate press releases.

Green Chip Stocks is a green penny-stock tip sheet.

Committee page

Witnesses

• Dr. Gary Yohe, Professor of Economics, Wesleyan University
• Mr. Jeffery Smith, Partner in Charge of Environmental Practice, Cravath, Swaine, and Moore
• Ms. Mindy Lubber, President, Ceres
• Mr. Russell Read, Chief Investment Officer, California Public Employees’ Retirement System

31/10/2007 at 02:30PM